Question

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♠ Answer the following questions with full explanation :

(1) What is Double Entry System? What are it's characteristics ?

(2) Give two advantages of Double Entry System.

(3) What is meant by Nominal , Real and Personal account ?

Answer 1

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Here are your answers

(1) Double entry bookkeeping, in accounting, is a system of bookkeeping so named because every entry to an account requires a corresponding and opposite entry to a different account. The double entry has two equal and corresponding sides known as debit and credit. The left-hand side is debit and right-hand side is credit. Following are the characteristics:―
1. Every business transaction affects two or more accounts.
2. Every account is divided in two parts. 
3. Division of amount column as debit and credit. 
4. Dual aspect of every transaction. 
5. Based upon accounting concepts and conventions.
6. Preparing trial balance. 
7. Preparation of final accounts.

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(2) The two advantages of Double Entry System are as follows:―
1. Under this method both the aspects of each and every transaction are recorded. So it is possible to keep complete account.
2. Under this system mistakes and deflections can be detected - this exerts a moral pressure on the accountant and his staff.

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(3) Nominal accounts are the temporary accounts, such as the income statement accounts. In other words, nominal accounts are the accounts that report revenues, expenses, gains, and losses. This means that their account balances are transferred to a permanent account.
A real account is a general ledger account that does not close at the end of the accounting year. In other words, the balances in the real accounts are carried over to become the beginning balances of the next accounting period. Generally, the real accounts are the balance sheet accounts.
A personal account is an account for use by an individual for that person's own needs. It is a relative term to differentiate them from those accounts for business or corporate use.

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Answer 2

Hey mate ✌️✌️


(1)Double column cash book is a cash book with two column on each side ;one column to record cash transaction and other column to record bank transaction . Stating differently deposit of cheque or cash, issue of cheque and withdrawal of cash from Bank ,etc .are recorded in bank column of cash book . Double column cash book represent to account cash account and bank account .


➡️Bank Account is an asset account as per modern approach ( our personal account as per traditional approach )and while recording transaction in the bank account of the cash book ,the rule of debit and credit applicable to asset account ,increase in asset is debited and decrease in Assets credited is followed.

➡️Thus,for cash deposit into the bank -bank balance increase or bank is the receiver and therefore is debited in the bank column of the cash book . Since cash is deposit into the bank ,cash decreases or cash goes out ,cash column is credited in the cash book . Similarly4 cash withdrawn or cheque issued -bank balance decreases and Bank would be the giver ,therefore it is credited in the bank column of the cash book .


(2) Advantage of Double column ⤵️⤵️⤵️⤵️


➡️While commencing a new business
capital is introduced in the business .The amount is written in the cash column .


➡️All receipt are written on the dish recipe side ,cash in the cash column and cheque in the bank column .


♣️NOMINAL ACCOUNT ➡️ Account which relate to expense, losses, profit and revenue .

Example ⏩ Purchase Account, Discount allowed Account, Discount Received Account,Rent Account, commission Account,etc.


♣️ PERSONAL ACCOUNTING ➡️ Account which include name of any human being and name of any business entity .

Example ⏩ Debtors Account, Capital Account, Creditor Account,etc.


♣️REAL ACCOUNT ➡️ Accountwhich include name of any assets.

Example ⏩ Building, Furniture, Investment,etc.


✨ Hope this helps you ✨